As India is moving closer to cashless economy after the government's historic decision on November 8 to demonetise higher denomination currency, the recent announcement to exempt excise duty on Electronic Data Capture (EDC) machines, also known as Point of Sale (POS) machines, has made retailers scramble to install POS machines at their billing counters to accept plastic money.

Several public sector and private banks have
decided not to levy transaction charges on card payments, which will
further encourage small and medium retail business to go for digital
payments through EDC.

POS machines are used for cashless transactions,
both for making payments or as money vending machines to disburse
cash in large retail businesses like Big Bazaar.

In
Focus

As POS devices are exempted from Central Excise
Duty, these devices will also escape from Additional Duty of Customs
(CVD and SAD). To encourage domestic POS manufacturers, all
components required for making POS devices will not face excise duty,
and also SAD and CVD. As per the government notification, these
devices can enjoy a tax exemption till March 31, 2017.

Understandably all dealers and manufacturers of
POS are happy with the present opportunity. Bhaskar Venkatraman,
Founder and Director of Millennium India, which deals with various
POS devices such as POS terminals, Magnetic Card Readers, Receipt
Printers, and Barcode Scanners, said, "Demonetisation will take the
country towards cashless economy in the near future. Already we have
more than one million POS machines across the country installed by
various banks. The recent development will push one million more POS
devices across India in just another three to six months. People will
have to use cards for all basic transactions which will further ease
cash crunch."

In real sense, POS devices are not just card
swiping machines, but are intelligent devices that can do many works
such as billing, card payment, printing receipts and so on.

In a
typical super market setup, we call it as POS terminals or POS cash
registers which have a combination of a POS terminal to do billing
and manage other back store operations, card reader, receipt printer,
cash drawer, barcode scanner, pole display and suitable POS software
to run the operations seamlessly. The POS machines which banks are
issuing will only help to accept money through credit/debit cards,
explained Bhaskar.

Experts believe that there will be a spurt in
imports of EDC machines and chances of intrusion of cheap machines
from China can't be ruled out. The demand will further reduce the
prices of POS machines to around 15-20 per cent and going forward,
small retail outlets and even roadside stalls will need card swiping
machines.

Earlier, retail outlets and supermarkets, which
were registered with banks and linked with respective current
accounts, were only allowed to use POS machines. But with
demonetisation and subsequent government's announcement to push
plastic money, even normal stall-keepers who have a bank account can
use EDC machine to stay in business.

Earlier, the EDC devices or credit/debit card
swiping machines were made available by the Merchant Acquiring Teams
of banks. And banks which give such machines are State Bank of India,
ICICI Merchant Services, Axis and HDFC Bank. Now, all banks are
issuing such devices to their customers with the condition that they
should have a current account with them.

Banks give machines to merchants and allow them to
transact after linking the POS devices to their respective business
accounts. Thanks to demonetisation, good time ahead for
sellers/dealers and manufacturers of POS/EDC machines in India.